Who Pays for Climate Change?

by senior futurist Richard Worzel, C.F.A.

Hurricane Harvey was not a surprise. At least, it shouldn’t have been.

Hurricane Ike, which ran just slightly to the east of Houston in 2008, caused an 8 ½ foot flood along the Galveston Strand (i.e., sandbar) to the southeast of Houston. NOAA (the National Oceanic and Atmospheric Administration) estimated that if Ike had run inland just 30 miles west of where it did, Houston would have suffered far worse flooding. And, in particular, a clutch of the world’s largest petrochemical processing facilities would have been submerged by Ike.

In the aftermath of Ike, the city of Houston, the state of Texas, and the U.S. federal government talked about building a system of flood gates to protect the area, sometimes referred to as “Ike’s dike”. However, as the shock wore off, and the emergency returned to the humdrum of everyday life, the urgency wore off, and the proposals bogged down in the usual nonsense of who was going to pay, and where, precisely, it would go, and who, exactly, might get the lucrative contracts.

So when Hurricane Harvey hit this year, Houston was actually in a worse state of preparedness than it had been for Ike, having squandered the nine years in between.

But the bigger issue is that Harvey is going to cost something on the order of $180 billion in disaster relief and rebuilding.

It’s somewhat ironic that many of the members of the Texas delegation to Congress, led by Senator John Cornyn, who voted against providing federal aid to the victims of Superstorm Sandy, which hit New York and New Jersey in 2012, were lining up to ask for federal aid for the victims of Hurricane Harvey. Apparently, it’s only an abdication of personal responsibility to depend on federal money if someone else is getting it.

Hurricane Irma crushed a number of the Leeward Islands of the Caribbean, such as Barbuda, and although it inflicted significant damage on large parts of Florida, it veered just enough from the most damaging course that the worst ravages were avoided. Even so, costs are estimated somewhere between $50 and $100 billion to repair the damage in Florida alone. As Florida is an electoral swing state, virtually every politician in Congress came out in favor of aid.

Hurricane Maria smashed those parts of the U.S. Virgin Islands that Irma missed, such as St. Croix, and absolutely crushed Puerto Rico, destroying much of the island’s vegetation, knocking out almost all of the electric power grid, stranding communities by blocking or destroying roads, and leaving many, perhaps a majority of the residents in dire need of water, food, and shelter. Puerto Ricans are U.S. citizens, but cannot vote unless they move to the mainland, with the result that federal politicians, notably the Republicans, and especially President Trump, were remarkably (or predictably) lackadaisical about rushing federal aid to the island.

But that’s not all of the toll racked up by climate change in 2017. Wildfires scorched much of the western U.S., destroying an estimated 8 million acres of western forests at a cost in the billions.

A Ballplayer on Steroids

Despite all of the evidence to the contrary, I still get people telling me that these are merely routine natural occurrences. There have always been floods, always been wildfires, always been hurricanes, and so on, they say, and that’s true. What is different now is precisely what climatologists warned us was coming: the frequency and ferocity of weather extremes is rising. And one way of illustrating this is by drawing an analogy to a baseball player on steroids.

If a juiced ballplayer hits a home run, you can’t ascribe that specific home run to steroid use. But you can absolutely say it’s due to steroids if a juiced player goes from hitting 10-15 home runs in a season to hitting 30-40.

Likewise, warmer temperatures increase the probability of drier forests, more lightning storms, and therefore more wildfires. And warmer waters in the Atlantic Ocean, Caribbean Sea, and Gulf of Mexico mean more, and more powerful, hurricanes. Higher sea levels mean higher tides, and particularly higher storm surges, as happened with Superstorm Sandy. And more, and heavier rainstorms mean more flooding.

So, although you might not be able to say that Hurricane Harvey was specifically due to climate change (although climatologists are now starting to be able to make such statements, and back them up), you can absolutely say: They warned us this would happen, and now it is happening. How else can you explain that Houston has endured three “once in 500 year” floods in three years?

Who Pays?

And this brings me to my central point: as the toll of more extreme weather events adds up, even the deep pockets of central governments all around the world will start to get tapped out. (Some would argue that the U.S. government is already too indebted, especially when you include future Social Security and Medicare entitlements.) What happens after that?

Let’s take Puerto Rico as a possible case study. Let’s assume, merely for argument’s sake (of course) that Washington doesn’t do much to help Puerto Rico rebuild. What happens to Puerto Ricans then, especially as Puerto Rico is already deeply indebted?

Well, two things happen. First, they will have to rely on themselves. And second, they will be seriously impoverished. They will be poor. And they are pointing towards a future we may all share – unless we do something about it.

Let me come back to the first point later, and deal with the second now.

One inevitable consequence of more extreme weather events is that we will all get poorer. People in the direct path of such extremes will get poorer faster, but the rest of us will get poorer, too, as our tax dollars get diverted from other programs to disaster relief as governments try to help those harmed by disaster. Or, eventually, as governments stop being able to help those harmed by disaster.

At this point in a discussion with my audiences, someone will say, “Boy, I’m glad I don’t live in a disaster-prone area like Florida or Houston!” My reply is, “Yup – but you want to be sure you don’t live anywhere where there are hurricanes, rainstorms, thunderstorms, droughts, tornadoes, blizzards, Spring floods, flash floods, rising rivers, rising sea levels, coastal storm surges, wildfires, diseases like Zika or malaria that have spread from the tropics – or earthquakes, just for good measure (even though those aren’t related to climate change).”

I don’t know about you, but I know of no such fortunate place. Everyone is vulnerable in some way, and those who are smug and self-righteous today (like members of the Texas delegation were after Superstorm Sandy) may find themselves as the next supplicants.

So, with a steadily rising incidence of extreme weather (and climate related) events inflicting steadily higher amounts of damage, most of us will be randomly impoverished sooner or later. Which brings me back to my first point: We will have to learn to rely on ourselves.

What Can We Do?

Breaking down what we can do in general terms, without knowing in advance what disasters we might encounter, divides into two parts: How do we recover once we are hit? And, how do we reduce our future vulnerability?

Both questions share a partial answer: Foresight can drastically reduce eventual costs.

Let me go back to Puerto Rico to serve as an example of how foresight can reduce costs in recovery.

Almost all of Puerto Rico’s electric grid was knocked out by Maria. It would take years, and many billions of dollars, to rebuild it. However, why reproduce what is fundamentally an early 20th century solution in a 21st Century world?

Instead of stringing all that wire, and rebuilding large-scale, centrally-located (and therefore vulnerable), electric power generating stations, build a distributed renewable energy system, with rooftop solar panels, community windmills, and individual building and community power storage batteries. This would:

  • fix Puerto Rico’s need for electricity more quickly, plus isolated communities wouldn’t have to wait for power cables to reach them;
  • be cheaper in terms of capital cost than rebuilding a traditional grid;
  • produce cheaper electricity in the long run; and
  • be more resilient in the event of a future hurricane or extreme weather event because power generation would be distributed.

Meanwhile, governments at all levels should look at the kinds of disasters that have struck, or that may strike, communities within their jurisdictions, and develop and stockpile up-to-date, smart solutions to such problems, as well as identify resources and suppliers who can quickly produce the needed components to remedy a disaster. And, in particular, as new, smarter technologies emerge that can enable us to do things we need done, but faster, cheaper, and more effectively, we swap out old ways of doing things with new ones.

Then, when a disaster does hit, the government involved pulls the relevant solution off the shelf, looks at how it might need to be adapted or updated to the specific circumstance, then pushes the “GO” button to implement it.

The cost of this kind of disaster-recovery planning is tiny compared to trying to reproduce an aging infrastructure from scratch.

Making Infrastructure More Robust Reduces Vulnerability

Foresight in planning a more robust infrastructure pays off big-time:

“In 2009, social scientists Andrew Healy and Neil Malhotra pointed out that the federal government can invest disaster money either before a crisis — in disaster preparedness such as equipment to protect against flooding — or afterward — in disaster relief such as direct payments to victims. … The results, based on data from 1988 to 2004, are dramatic: The researchers found that within one presidential election cycle, voters reward presidents for spending on relief, but not for spending on preparedness.

“It’s unfortunate that we reward post-disaster spending, since it’s smarter to invest in preparedness. Healy and Malhotra found that spending roughly $1 on preparedness is worth the same as spending about $15 on relief, in terms of actual disaster management.[1]

The bolded emphasis is mine.

Since we know there will be more extreme weather events, it makes a lot of sense to exercise foresight now in the form of researching, planning, and executing investments into more robust infrastructure, and accepting the relatively minor tax increases that this would require. This is particularly so as governments in virtually all developed countries have chronically under-invested in infrastructure for the last 40 years or more. So, we can plan and replace aging infrastructure now, and make ourselves more resilient to future disasters – or we can sit passively by and wait until we are in desperate need, let events impoverish us by destroying the things we own, and watch our taxes skyrocket as we spend $15 where we could have spent $1.

All it takes is political will, a willingness to spend a little bit of money now rather than massive amounts of money later, and foresight.

Unfortunately, this means we are facing a real challenge to see if humans truly are intelligent, or have barely enough brains to get in out of the rain once we’re getting wet.

And One More Thing…

If we assume that humanity is smart enough to invest in its own future, then one of the best things we could do to reduce future vulnerability is to reduce the extent to which climate will change.

We are going to experience significant changes in climate. That’s already baked into the Earth’s future by our past behavior. We will see at least a 2o (Celsius) increase in global temperatures because of all the greenhouse gases (GHGs) we have already dumped into the atmosphere.

But we are steadily making things even worse for ourselves. Not only do we continue to dump CO2 and other GHGs into the atmosphere, but we are doing so at an accelerating rate! Not only are we not getting better at what we do, we are actually getting worse, and faster, despite the clear evidence in front of us that it may ruin us.

Those who oppose this kind of action talk about how much it will cost. There are two counters to this. First, it may actually save us money. Renewable energy is now, in many places, cheaper than fossil fuels, and prices continue to fall. In the case of solar energy, prices are dropping by an estimated 26% with every doubling of capacity – an astonishing rate of change. So it is clear that if we think carefully, plan it wisely, and do it sensibly, we can actually save money by reducing GHGs in many, perhaps most, situations.

My second counter-argument is more big-picture: How much will we spend to recover from disasters like Hurricanes Harvey, Irma, and Maria, plus all the other extreme weather events ahead of us, compared to how much it will cost us to change our behavior? I don’t know of anyone who has performed this kind or scale of calculation, but I would bet that, using Monte Carlo (probabilistic) modelling of future events, versus the pretty well-defined economics of significantly curtailing or eliminating GHG emissions, we would find that we will spend less changing our behavior than picking up the pieces in the wake of future disasters.

We cannot duck out of paying for the problems ahead. The question really comes down to whether we want to pay more for an awful, impoverished future, or think clearly, plan wisely, invest less money now, and enjoy a more livable future.

This is the choice we will be forced to make.

© Copyright, IF Research, October 2017.


[1] “Disaster Politics Can Get in the Way of Disaster Preparedness”, Olive Roeder & Andrea Jones-Rooy, 31 Aug. 2017, fivethirtyeight.com website, fivethirtyeight.com/features/disaster-politics-can-get-in-the-way-of-disaster-preparedness/

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